Analyst Note| Michael Makdad |
We increase our fair value estimates for Japan's three mega-banks Mitsubishi UFJ Financial Group, or MUFG, Sumitomo Mitsui Financial Group, or SMFG, and Mizuho as we roll our models forward. MUFG's rises to JPY 590 from JPY 550, 7% below its current share price. SMFG's rises to JPY 4,600 from JPY 4,350, or 15% upside; and Mizuho's to JPY 1,400 from JPY 1,330, or 17% downside. This places MUFG in 3-star, SMFG in 4-star, and Mizuho in 2-star territory in Morningstar's 5-star system. All three rallied (by 61%, 51%, and 34%, respectively) from November until mid-March and are now slightly below their March peaks.